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Midpoint formula The elasticity $$\epsilon$$ can be calculated using the midpoint formula: $$\epsilon = 100*\frac{\frac{Q_1 – Q_0}{\bar{Q}}}{ \frac{P_1 – P_0}{\bar{P}}}$$…

## Cobb-Douglas function

tThe Cobb-Douglas function is used to measure consumers preferences between different bundles of goods or how a firm can combine…

## Calculate the equilibrium price and quantity from math equations

In this post, I will cover how to find the equilibrium quantity and price when given an equation representing the…

## Price floor and tax on cheese market

Price floor on the cheese marketTax on the cheese market Price floor on the cheese market Suppose that the government…

## Consumer, producer and total surplus

Producer surplus from supply scheduleCalculate producer surplus from supply curve Consumer and producer are both economic measures of welfare. Consumer…

## Supply schedule

In economics, the term ‘supply’ is used to describe how many goods and services people are willing to sell for…

## Terms of trade

Often, as economists, we are interested in measuring how expensive imports are compared to the price received for exports. The…

## Consumer Price Index (CPI) and inflation rate formula

Consumer price index formulaCalculate CPI with one goodCalculate CPI with two goodsInflation rate formulaCalculate inflation rate with one goodCalculate inflation…

## Isoquant and isocost line

The isocost and isoquant line are used to determine the cost minimising level of output produced by a competitive firm.…